Power-to-X can, importantly, integrate various decarbonization technologies. In certain pathways, hydrogen can be combined with captured carbon dioxide. As an example, Power-to-Methane combines green hydrogen with carbon dioxide to produce methane with a methanation reaction, such as the Sabatier reaction or biological methanation.
According to the European Commission’s Vision for a Clean Planet by 2050, ‘The most important single driver for a decarbonized energy system is the growing role of electricity both in final energy demand and in the supply of alternative fuels, which will be mostly met by renewables, and in particular by wind and solar electricity’.
The significance of Power-to-X is in making possible the massive deployment and use of electricity from renewable sources through the connection of the power and gas infrastructure, or so-called sector coupling, which removes the traditional separation between the two sectors and allows the integration of the power system based on renewables with the energy-use sectors (industrial, buildings, transport). It also increases flexibility and efficiency of the energy system and enables cutting emissions in hard-to-abate applications, a vital prerequisite for achieving a zero-carbon economy by 2050.
Overview of commercial application of Power-to-X based on project observations
In 2020–2021, the European Commission’s stimulus measures, such as the introduction of the EU hydrogen and industrial strategies, announcement of national IPCEI (Important Project of Common European Interest) calls and establishment of dedicated funds and alliances, resulted in booming announcements of projects in Europe and beyond. Global players along the entire energy supply chain joined the move under the pressure of growing demand for greener products, tightening regulations of carbon emission in Europe and shifting focus of funding organizations toward sustainable investments.
With Power-to-X at heart, project models are built around commercial availability of renewable power and accessibility of infrastructure, customer preferences for the type and location of the ‘X’ component, as well as legislative frameworks and governmental incentives.
Based on availability and capacity of renewable power generation, the key observed types of business models include:
- Electrolyzer connected to renewable energy sources. This model provides virtually zero carbon electricity as well as potential for a lower levelized cost of electricity (LCOE) and more competitive hydrogen production costs. Among the key limitations, there may be dependency on location and capacity of a renewable generating unit, intermittency of renewable power supply and a lower average load factor of the electrolyzer resulting in lower and interrupted hydrogen output.
- Electrolyzer connected to the grid. The key advantages of this model are an independent electrolyzer location, availability of green power via Guarantees of Origin (GO) or Power Purchase Agreement (PPA), a high load factor and virtually stable hydrogen output. However, the downside of the model may be limited accessibility of grid connection with additional CAPEX and grid charges.
- Electrolyzer connected to both renewable energy sources and the grid. The model combines the benefits and limitations of both renewable and grid connected electrolyzers. On the positive side, there are availability of virtually zero carbon power generation backed up by stable electricity supply, a lower LCOE due to the lower marginal renewable electricity cost, more competitive hydrogen production costs and virtually stable hydrogen output. At the same time, there may be some limitations due to additional CAPEX of grid connection and grid charges. Additional risk may occur due to potential carbon intensity of hydrogen production not eligible at the off-taker side, which can be a limiting factor for choosing this model.
Depending on the customer’s preferences for the type and location of the ‘X’ component, the project model may combine different technologies of green hydrogen production, its conversion to transportable forms as well as distribution and storage of hydrogen and hydrogen derivatives complemented by technologies enabling the product’s application, including fuel cells, combustion and use as a feedstock.
According to the observation of ongoing projects, among the leading technologies enabling hydrogen transportation, storage and industrial application, there are ammonia, liquefied organic hydrogen carriers (LOHC), e-methanol and hydrogen liquefaction, each of them having specific pros and cons.
- Ammonia production technology involves hydrogen and nitrogen synthesis through a one-step catalytic process, so called the Haber–Bosch process, a gas phase reaction. Nitrogen for the green ammonia synthesis is produced by pressure swing absorption or cryogenic air separation. Ammonia applications may include both hydrogen storage and release upon demand and use directly as a chemical substance (e.g., fertilizer). Among the technologies, compared within this article, ammonia provides the highest volumetric hydrogen content, which makes logistics more economically efficient compared to other technologies. This enables long-distance hydrogen transportation and cross continental export. However, ammonia has special treatment requirements for hydrogen storage, shipment and extracting. It is a flammable gas, which may form explosive mixtures with air.
- Methanol production technology involves hydrogen and carbon dioxide (CO2) synthesis. CO2 can be either captured from various industrial streams (power plants, cement plants, etc.) or obtained from renewable sources (distilleries, biogas units, fermentation units). Produced through a Power-to-X technology, green methanol is considered an electrofuel (e-fuel) and electrochemical Like green ammonia, green methanol application includes both hydrogen storage and release upon demand and use directly as a chemical substance. The technology provides advantages of economically efficient logistics due to a high volumetric hydrogen content and an opportunity to utilize conventional fuel infrastructure, complemented by a relatively low need for energy to extract hydrogen and virtually zero losses during production and shipment. The limiting factors are high sensitivity to reliable and cost-efficient CO2 supply as well as high flammability, which may raise public concerns becoming an obstacle for the technology penetration.
- Liquid organic hydrogen carrier technology (LOHC) is based on the absorption of gaseous hydrogen in the liquid organic substances (carriers) through chemical reactions and its further release in the gaseous state on the consumer site. For hydrogen absorption and desorption special installations are used. LOHC technology is applicable for hydrogen storage and release upon demand. Competitive advantages of LOHC are an opportunity of transportation in conventional fuel tanks, the most promising CAPEX and OPEX, slightly lower than those of ammonia as the closest competitor and a virtually zero level of explosiveness. However, this technology has the lowest TRL (technology readiness level) compared to the other analyzed technologies.
- Hydrogen Liquefaction technology (HL/ H2L) is based on the transformation of gaseous hydrogen into the liquid state under low temperature conditions – minus 253 degrees Celsius – in order to provide higher storage density in comparison with the compressed gas that has low storage density. Hydrogen liquefaction technology is the most mature among the above compared ones, already entering a mature stage with the continuously increasing production capacity offered by a number of companies. However, hydrogen liquefaction is highly explosive and requires additional costs and treatment as well as usage of special storage tanks and dedicated procedures.
An increasing number of hydrogen technology providers are developing and licensing hydrogen storage and transportation solutions, including entire plants, synthesis units, catalysts as well as loading and release infrastructure to provide sufficient hydrogen supply. Observed are partnerships of world-class technology providers with start-ups and local technology firms in licensing processes aimed at expanding business and market presence and involvement in large-scale industrial projects.
Depending on the specific place in the overall value chain, the projects are developed around three main types of hydrogen clusters:
- Industrial centers with already existing refining, power generation, fertilizer and steel production;
- Existing transportation and storage infrastructure, such as port facilities, gas pipelines or salt caverns suitable for hydrogen storage;
- Export hubs in resource-rich (solar and wind) countries such as Saudi Arabia, the United Arab Emirates and Oman.
By scale, industrial application and geographical coverage, there may be distinguished different types of projects: local, regional/ sectoral, international/ cross continental with the project scale varying from below one megawatt to dozens of gigawatts.
Sophisticated project models including a combination of different technologies – quite often having different levels of maturity – bring additional complexity to project planning, funding and execution. Therefore, a limited number of projects are developed by a single company, while the majority of observed projects are implemented by consortia of partners united to share project risks and secure funding from a combination of public and private sources. Moreover, due to technological and financial uncertainty, projects may evolve with changes of partners and technological concepts or becoming part of larger initiatives to combine different stages of the overall value chain.
What’s in it for Central and Eastern Europe?
In Central and Eastern Europe, interest in Power-to-X and Energy Transition technologies is on the rise, supported by the political and business commitment, which is shaping the investment trends. In 2021, some countries of Central and Eastern Europe are demonstrating an emerging trend of business case development testing the options and carving out a niche in the new low carbon economy.
Technologies and best practices applied to projects observed in the CEE region are mainly taken from countries in Northwest Europe (NWE) led by Germany and the Netherlands, which are interested to scale up technologies and create a hydrogen production hub to utilize favorable economic conditions and commercially available renewable capacity of the region.
While Poland, Romania and the Czech Republic are leading the Energy Transition move in the EU by number and scale of announced projects, Ukraine is among the European Union’s priority partners for the Hydrogen Strategy implementation with a special place in a value chain framed by the ‘2×40 GW Green Hydrogen’ initiative introduced by the European industry association Hydrogen Europe in 2020.
We, at Bilfinger Tebodin, have been experienced in the Energy Transition technology mix in different global and regional markets, helping our clients turn the challenges of the Energy Transition into business opportunities. Our next publication will cover the topic of the hydrogen project road mapping and strategies at each stage of a project’s planning and implementation.